NEW YORK (Frankfurt: A0DKRK - news) , June 29 (Reuters) - Wall Street rallied on Friday, with major indexes trimming quarterly losses, after euro zone leaders agreed to allow rescue funds to be used to stabilize the region's banks.

Details of the agreement, which includes the creation of a single supervisory body for euro area banks, remain to be worked out. But Italian and Spanish borrowing costs fell, though they remained not far from recent highs, as market expectation for any action during a two-day European Union summit had all but vanished.

"We've gotten used to being underwhelmed by the outcomes, so with little to no expectations for success, the fact that it appears we are going to get something substantial is a real important positive for the market in the near term," said Art (Munich: A0DKUE - news) Hogan, managing director of Lazard Capital Markets in New York.

"It's inching closer to a banking union and the closer we get to a banking union would put (the EU) well on the road to a fiscal union."

U.S. Bank stocks were among the market leaders as the risk of exposure to their European peers diminishes. The KBW bank index jumped 2.3 percent led by a 4.4 percent rise in shares of Citigroup (NYSE: C - news) .

Brent and U.S. crude prices soared more than 4.5 percent on the back of the EU agreement and further boosted by a near 2 percent jump in the euro against the U.S. dollar. The S&P energy sector added 2.2 percent.

Equities and other risky assets have recently been weighed by concerns that stubbornly high borrowing costs in Spain and Italy could force the fourth- and third-largest economies in the bloc to seek bailouts.

The steep gains trimmed a quarterly decline in the S&P 500 (SNP: ^GSPC - news) to just under 4 percent. The benchmark has, so far, gained 3.2 percent in June.

Trading could be volatile and see higher than average volumes as managers square positions ahead of the end of the second quarter. The outperformance of bonds in the past three months could trigger inflows into stocks and extend the expected rally.

The EU summit news overshadowed a batch of mixed U.S. data. Attention in Europe (Chicago Options: ^REURUSD - news) now turns to next week's European Central Bank meeting. The consensus is that the bank will cut its main refinancing rate by 25 basis points to 0.75 percent and may trim the deposit rate - the rate it pays banks for parking money with it - by 25 basis points to 0 percent.

Hospitals and insurers providing Medicaid plans for the poor were the main corporate winners from the U.S. Supreme Court's decision Thursday to uphold President Barack Obama's Affordable Care Act, as they prepare to see an influx of customers with no prior access to healthcare.

U.S.-traded shares of Research in Motion tumbled 16.5 percent to $7.62 in the wake of the company's decision Thursday to delay the make-or-break launch of its next-generation BlackBerry phones until next year.

Nike shares dropped 10.9 to $86.34 percent a day after the world's largest sportswear maker missed quarterly profit estimates for the first time in at least two years.

New York: The brother of a man who became an icon of financial crime is poised to plead guilty to criminal charges, taking his place alongside Bernard Madoff, the man behind the largest Ponzi scheme ever prosecuted in US history.

Peter Madoff, 66, was taken into custody at his lawyer's Manhattan office this morning, according to FBI spokesman J Peter Donald. A court appearance was scheduled a few hours later.

The plea was to take place at same courthouse where Madoff's now-74-year-old brother was taken away in handcuffs after being condemned to 150 years in prison in 2009 for cheating thousands of people out of billions of dollars.

The two are the only Madoff family members to face criminal charges.
Madoff is agreeing to serve 10 years in prison for conspiracy and falsifying records and surrender his assets. The agreement will let investigators show what they have learned about the Ponzi scheme since Bernard Madoff revealed in December 2008 that his investment business was a sham.

The government has used the cooperation of six former employees and associates of the Bernard L Madoff Investment Securities LLC to learn what went on inside the secretive business that caused almost USD 20 billion to vanish, leaving only a few hundred million dollars where bogus financial statements claimed there was USD 65 billion.

Peter Madoff kept firmly behind the scenes as Bernard Madoff provided the face of the investment firm that attracted rich and famous clients with too-good-to-be-true returns.

In his 2009 guilty plea, Bernie Madoff maintained that his brother had nothing to do with it, and for more than three years, his brother agreed.

Peter Madoff's lawyer hasn't commented on the plea deal. Peter Madoff was the firm's top technocrat.

He was credited with creating a computer trading system for the firm in the late 1970s and early 1980s that was considered groundbreaking at the time. He ran the daily trading operation, while his brother focused on the more secretive investment advisory arm.

When Bernie Madoff was arrested, Peter Madoff broke the news to Madoff Securities employees. Through attorneys, he denied any wrongdoing.

But the denial didn't stop federal authorities from moving to freeze Peter Madoff's assets. He agreed not to dispose of his substantial fortune and promised to curtail his personal spending as the investigation moved forward. His living expenses were capped at USD 10,000 a month.

Global stocks and the euro surged the most this year, oil had its biggest gain since 2009 and Spanish bonds rallied after European leaders reached an agreement that eased concern banks will fail.

The MSCI All-Country World Index climbed 3 percent, the most since November (MXWD), while the Standard & Poor’s 500 Index advanced 2.5 percent to cap its best June since 1999. The euro appreciated 1.7 percent against the dollar and rallied as much as 2 percent, the most since Oct. 27. Spain’s two-year yield plunged more than a full percentage point. The S&P GSCI gauge of 24 commodities rose 5.6 percent, its biggest gain since April 2009, as oil surged 9.4 percent to $84.96 a barrel.

After talks ended at 4:30 a.m. in Brussels today, leaders of the 17 euro countries dropped requirements that taxpayers get preferred creditor status on aid to Spain’s banks and opened the way to recapitalize lenders directly, while relaxing conditions on potential help for Italy. Before today, more than $4.9 trillion had been erased from global equities this quarter amid concern a worsening debt crisis will stifle the global recovery.

“It’s a relief rally,” said Ann Miletti, fund manager for Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin. Her firm manages $201 billion. “The agreement at least brings some clarity and stabilization in the short term. More positive news out of Europe is all you need in a market that’s been depressed given all the uncertainty out there.”

The gain in the S&P 500 today was its biggest since Dec. 20 and trimmed its retreat for the quarter to less than 3.3 percent. The index rose 4 percent in June and 2 percent for the week.

Constellation Rallies

Constellation Brands Inc. (STZ) (STZ) rallied 24 percent, the most since at least 1986, after agreeing to buy the other half of its Crown Imports joint venture with Grupo Modelo SAB for about $1.85 billion, becoming the sole U.S. importer of top-selling Corona beer. Bank of America Corp., Cisco Systems Inc. and United Technologies Corp. surged more than 4 percent to lead gains in the Dow Jones Industrial Average, which rallied 277.83 points to 12,880.09.

Research In Motion Ltd. plunged after 19 percent in New York trading after posting a loss and delaying the next BlackBerry operating system.

Economic Data

Stocks rallied even as Commerce Department data showed U.S. consumer spending stalled in May, with household purchases, which account for about 70 percent of the economy, unchanged after a 0.1 percent increase the previous month. The median estimate of 75 economists surveyed by Bloomberg News called for no change in so-called nominal sales.

The Institute for Supply Management-Chicago Inc.’s business barometer showed business activity in the U.S. unexpectedly expanded in June at a faster pace as production and employment rebounded. The index increased to 52.9, topping the median estimate of 52.3. The Thomson Reuters/University of Michigan final index of sentiment fell to 73.2, trailing the median estimate of 74.1.

The Stoxx 600 (SXXP) advanced the most since November and extended this month’s rally to 4.8 percent. The gauge still retreated 4.6 percent in the quarter. National Bank of Greece SA, Bank of Ireland Plc and UniCredit SpA surged at least 13 percent to lead gains in 45 of 46 lenders in the index.

After markets closed in Europe, Germany’s lower house of parliament approved the euro-area’s permanent bailout fund, the European Stability Mechanism. The measure won a two-thirds majority in the chamber.

Asia, Emerging

The MSCI Asia Pacific Index rose 2 percent, reversing a 0.4 percent drop after the agreement was announced. Stocks fell earlier as a report showed Japan’s factory output dropped the most since the March 2011 earthquake last month.

Euro, Dollar

The euro surged 2.2 percent against the yen. Its gain versus the dollar left it 5.2 percent weaker since the end of March. The Dollar Index (DXY), which tracks the U.S. currency against those of six trading partners, tumbled 1.4 percent for its biggest drop since October. The Australian and New Zealand dollars jumped at least 1.6 percent against the greenback. The yen weakened against all 16 of its most traded peers.

Volatility on Irish government debt was the highest in developed markets today followed by Spain and Italy, according to measures of 10-year bonds, the spread between two-and 10-year securities and credit-default swaps. Irish bonds rose as Prime Minister Enda Kenny said the EU accord marked a seismic shift in policy that may ease the burden on the nation’s taxpayers.

Crude in New York led gains in the S&P GSCI index before an embargo on Iran starts. The EU agreed to ban the purchase, transportation, financing and insurance of Iranian oil starting July l. The sanctions are being imposed because western nations say Iran is hiding a nuclear weapons program. All 24 commodities tracked by the S&P GSCI advanced as lead, zinc, silver and copper rallied more than 4 percent.

The S&P GSCI dropped 13 percent in the second quarter and oil tumbled 18 percent, the biggest plunge for both since 2008.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net; Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net